When doing business in Brazil, you will probably need sign a contract, or write one up for someone else to sign. Especially if you are from another country, it is important to first understand the contract laws that exist in Brazil, as they might be different than the ones you are used to. Contracts are an important part of any business, so getting it right the first time is essential.
Contracts in Brazil
It is important to remember that, unlike many other countries, Brazil operates under a civil law code as opposed to a common law code. This means that it has many laws and written legislation for nearly everything, including:
- lease agreements
- agency relationships
- insurance contracts
- the protection of intellectual property
Before you write up or sign any contract, you should first make sure that there isn’t a more specific law you’ll need to follow under such a contract. There is also a difference between civil code contracts in Brazil and consumer’s code contracts.
Contracts Under the Civil Code
When contracts are under the civil code, it means that both parties willingly agreed on something. For example, a civil code contract would be a binding agreement between two farmers to trade 20 chickens for 5 pigs on a certain date. They are legally expected to do everything in their power to uphold their promise. Both parties have equal rights and attributes, and in the event of a breach, they would both be charged equally.
Contracts Under the Consumers’ Code
In certain cases, a contract might fall under the consumers’ code. Such a contract is more protective of the “economically weaker” party. When it comes to consumers signing contracts with big businesses, the consumer is always weaker, and therefore is protected under the consumers’ code. For example, a contract under the consumers’ code might be for a company to deliver a certain product to an individual. If this product had not met its description or expected level of quality, the company would have breached the contract and the court would have protected the consumer.
If you are operating your Brazilian business from the United States, or if you are investing in a Brazilian company, you should know where jurisdiction will lie for your contract. Brazilian law states that, when a contract is breached, jurisdiction lies in Brazil when the terms of the contract must be performed in Brazil. In other words, if the contract was actually breached in the confines of Brazil, the Brazilian court will deal with it.
If you are doing business for the first time in Brazil, do not wait until you accidentally breach a contract to get yourself an attorney. Breaching a contract could be expensive for you and your business, so it is worth getting an attorney who can guide you through the process before officially signing anything.